Clydesdale and Yorkshire deposits £27.3bn

CYBG CEO David Duffy

Clydesdale and Yorkshire Bank owner CYBG said trading in the three months to December 31, 2016, had been in line with its expectations with deposit balances up 4.7%, annualised, to £27.3 billion since September 30, driven by strong performance in current accounts and savings balances.

CYBG said its mortgage book increased to £22.1 billion and it maintained momentum in lending to small and medium businesses with £574 million in new loans and facilities as it released a trading update for the quarter.

The “challenger” banking group said that as expected, “asset yields came under pressure from the start of the period following the August 2016 base rate reduction” along with increased competition in retail lending markets.

“We saw the benefits of deposit repricing begin to offset these pressures towards the end of the period, alongside other measures to reduce funding costs, including a modest drawdown on the Bank of England Term Funding Scheme in December,” CYBG said.

It said it remained on track to deliver its full-year 2017 financial targets and its guidance remained unchanged.

CYBG shares were trading down almost 3%, giving it a current stock market value of roughly £2.5 billion.

CYBG CEO David Duffy said: “We have made a solid start to the financial year and are on track to achieve our financial targets as planned. 

“We have also made good progress in delivering on our strategic priorities.

“Despite a competitive market, we continue to grow assets prudently while focusing on sustainable margins and portfolio management. 

“Whilst there is some uncertainty created by Brexit, economic indicators in the UK have proved resilient since the referendum vote.  

“To date we have not seen any negative impact on asset quality, but we continue to monitor market conditions closely.

“Our cost delivery remains on track as we implement structural change as part of our transformation programme and associated headcount reductions, in line with expectations. 

“We remain focused on executing our strategy to deliver improved returns for shareholders through sustainable growth, efficiency and capital optimisation, while focusing on customer experience.”